Timmy Dooley (Clare, Fianna Fail)

I accept that this is a Labour Party initiative but it is recognised as an issue of fundamental importance by all sides. There is a difference of opinion about how to proceed. On the basis of legal advice provided, the Government has no choice but to vote against the proposal. However, there should be no misunderstanding of the concern that resides on this side of the House. We all know the stress and strain suffered by the retail sector, much of it as a result of the recession and the expansion of the retail sector that took place in the boom years. The sector is now undergoing a contraction. It is clear it will not be possible in a normalised environment to retain the same level of retail activity that took place at the height of the boom. There will be a contraction because the retail sector grew to meet the splurge of the boom.

There is a fundamental problem with the rent structure. I support the objective as set out in the Bill of trying to find a method to get rid of upward-only rent reviews. The Government initiative with regard to new leases is welcome but there is a fundamental problem in dealing with property rights retrospectively. The Minister has alluded to this difficulty.

Many landlords, particularly those outside the more recently developed entities, have taken a practical and pragmatic approach. They are working with their tenants, notwithstanding the conditions of the lease, and have reduced rents and this is to be welcomed. To tar all landlords with the same brush would be wrong and I recognise that many landlords have acted responsibly.

A number of landlords who are predominantly within the institutional sector are landlords of the big retail developments and they are holding a strict line for their own reasons. Some developers are in the same boat and they have no choice because their financial institution is demanding that they continue to retain rents at a very high level to support the payback of loans. Some banks are playing the game of inflating property values in advance of the transfer of loans to NAMA. I urge NAMA to take a critical approach to the valuation - as required by the legislation setting up NAMA - to ensure the level of return on the leases is apparent and to establish the kind of return on the leases that is sustainable in the long term. I have no doubt NAMA will do so and that it will not be in the interests of the banks to retain the level of rent roll to somehow prop up a false or misleading value for the loan.

It is regrettable that the working group is not reporting sooner than June but I understand that time is required to produce the report. Despite what Deputy English said, I believe this will be a very effective mechanism for dealing with what has been a cloak and dagger operation of understanding the forgoing of rents in particular areas. Pressure must be applied to the financial institutions and this can be done by means of the public interest directors who have been appointed.

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